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Ok, let us recap our first lesson;

Lesson 1: Don’t quit your day job without a plan.

Now, for lesson 2 & 3;

Mistake 2: Selling way too cheap. Ask a child to choose between 12 rhinestones and one diamond and she’ll go for the rhinestones every time. Startup owners are just like that. They fall for the fallacy of quantity over quality. They figure rock bottom prices will fuel skyrocketing sales and they’ll become millionaires. But it doesn’t work that way.

“New entrepreneurs are notorious for pricing their goods and services too low,” says Linda Hollander, author of “Bags to Riches,” a small-business handbook for women. “This dooms them to a life of always worrying about money. Heck, even when they get orders, they aren’t happy because they aren’t making enough profit on their sales.”

Before pricing products, do the math. Calculate fixed and variable costs. Research market and competitive price points. Develop your distinct marketing edge (some call it “USP,” for unique selling proposition). Figure the margin you need to walk away with dollars in your pocket.

Lesson 2: Don’t sell diamonds for the price of a rhinestone.

Mistake 3: Starting a business just for the thrill of it. Entrepreneurs tend to be big-picture types — visionaries, risk-takers, thrill seekers. The longer they must sweat the details, the jumpier they get. So they often engineer a crisis, just to get back in the game and feel the rush of adventure.

“Entrepreneurial boredom is the stealthy killer of seemingly healthy small businesses,” says Ralph Warner, author of “Drive a Modest Car & 16 Other Keys to Small Business Success.” The purpose of a business is to make money. If you come alive only by jumping off a cliff, take up bungee jumping.

Lesson 3: Don’t start a business to find life on the edge.

Article first published by Microsoft Small Business Center.

Lesson 4&5 in two days

If in the last post, we have look at the 1st of 7 biggest mistake most start ups do, now we will look at another 2 costly missteps. However, let recap lesson 1.

Lesson 1: Lesson: Don’t quit your day job without a plan.

Now, move on to lesson 2.

Mistake 2: Selling way too cheap. Ask a child to choose between 12 rhinestones and one diamond and she’ll go for the rhinestones every time. Startup owners are just like that. They fall for the fallacy of quantity over quality. They figure rock bottom prices will fuel skyrocketing sales and they’ll become millionaires. But it doesn’t work that way.

“New entrepreneurs are notorious for pricing their goods and services too low,” says Linda Hollander, author of “Bags to Riches,” a small-business handbook for women. “This dooms them to a life of always worrying about money. Heck, even when they get orders, they aren’t happy because they aren’t making enough profit on their sales.”

Before pricing products, do the math. Calculate fixed and variable costs. Research market and competitive price points. Develop your distinct marketing edge (some call it “USP,” for unique selling proposition). Figure the margin you need to walk away with dollars in your pocket.

Lesson: Don’t sell diamonds for the price of a rhinestone.

Mistake 3: Starting a business just for the thrill of it. Entrepreneurs tend to be big-picture types — visionaries, risk-takers, thrill seekers. The longer they must sweat the details, the jumpier they get. So they often engineer a crisis, just to get back in the game and feel the rush of adventure.

“Entrepreneurial boredom is the stealthy killer of seemingly healthy small businesses,” says Ralph Warner, author of “Drive a Modest Car & 16 Other Keys to Small Business Success.” The purpose of a business is to make money. If you come alive only by jumping off a cliff, take up bungee jumping.

Lesson: Don’t start a business to find life on the edge.